Ben: This is the question that I always get. [laughs] It’s not just from other folks in the industry, but obviously from every customer that we talk to. A lot of times, and I’ll just kind of explain here kind of how exactly this ends up playing out for us. A lot of times when we were doing fixed bid pricing, a customer was committing to us for the duration of a project.
Maybe, let’s just say, it’s a three month project, and it’s $50 grand, something like that. We’ve got some duration. We would look at that. We would say, “Let’s do three payments. We’ll do a third upfront. We’ll do a third when we’re halfway through, and we’ll do a third at the very end.” We would structure something kind of like that.
There are contracts that are signed in that scenario, that commit both parties to doing all this stuff, and making all those payments. What we found is that in order for us to request the flexibility and pricing that we want, we also have to give a little bit in terms of the flexibility for that contract.
What that means is that we don’t ask somebody to sign a long-term contract for us. In that same scenario, we would certainly put some thought behind, approximations, of what the budget should be. We may come up with a very similar number, but it’s all with the understanding that it’s an estimate. We’re doing our best guess here.
Then what happens is if we don’t do our job, if our customers aren’t happy with what we’ve delivered, they absolutely have the ability to walk away. Everything that we’ve done up to that point is theirs.
That understanding means that for us, we’re basically sharing the risk of the project with our customers. Instead of committing to some number, and seeing scope change, and dealing with all the struggles that come along with that kind of management, where there’s change request, and just constant dialogue about that. What we’ve found is if we don’t do our job, we lose it. We have to make our customers happy. We have to show that we’re delivering value for the price they’re paying.
Now, we’ll also say, for us, we adjust our hourly rate to make sure that we’re inline with what will allow us to deliver a really high quality project for a price. In the end, what happens is this becomes a very constant conversation with our customers. It opens up the conversation about money. We find ourselves literally every week talking with our customers about, “Hey, we’ve spent 60 hours so far on this. That’s about where we think we should be.”
But also, it’s possible that, “Hey, we’re a little behind honestly. What we’d like to do is get into a little bit more depth of conversation around the priorities that you have. Let’s get those literally listed, first priority to the last priority, and recognize that we may not get all the way through this list. If something is going to get cut, what should it be?”
It puts those decisions in our customer’s hands, and allows them to prioritize exactly what we work on, obviously with our recommendations for what would be a valid delivery. We get to work with them on it, I guess, is the point. That’s created much better, much stronger, longer lasting relationships with our clients.